$50,000 average new car prices are here to stay

Core Insights - The automotive market is experiencing an affordability issue for new vehicles in 2026, following a strong sales performance in 2025 driven by consumer concerns over potential price increases due to tariffs [1] Sales Performance - Retail consumers spent $620 billion on new vehicles in 2025, marking a nearly 6% increase from the previous year, despite the anticipated price hikes not materializing as expected [3] - New-car sales reached 16.3 million units in 2025, reflecting a 1.8% year-over-year improvement, the best performance since 2019, although sales showed weakness in the latter half of the year [4] Pricing Trends - The average transaction price for new vehicles in January 2026 was $49,191, a nearly 2% increase from the previous year, reversing a decline seen in December [6] - The average manufacturer suggested retail price (MSRP) rose to $51,288 in January, marking the tenth consecutive month that MSRPs exceeded $50,000, indicating a trend of sustained high prices [7] Market Share - In 2025, the market shares of major automakers were as follows: GM at 17.3% with 2.83 million vehicles sold (+5.1% YoY), Toyota at 15.5% with 2.52 million vehicles (+8.4% YoY), and Ford at 13.4% with 2.18 million vehicles (+5.6% YoY) [9] Incentive Spending - Automakers have reduced their incentive spending in recent months, with January's average incentive package at 6.5% of the average transaction price, down from 7.1% in January of the previous year [10]